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Fight over EU’s budget for 2014-20 intensifies

The European Union’s member states are preparing for a clash in September over the Union’s next long-term spending plan. The decisive phase in negotiations on the multi-annual financial framework (MFF) for 2014-20 will begin on 30 August, when ministers for foreign or European affairs meet in Nicosia for informal talks. They will be preparing for a first round of formal negotiations on 24 September on overall spending ceilings.

Cyprus, the current holder of the rotating presidency of the EU’s Council of Ministers, is seeking to push for a “moment of truth” at the informal meeting at the end of August, a diplomat said. The meeting will be the last opportunity for national governments to get their demands and priorities reflected in an issues note that Cypriot diplomats are currently drafting. In September, Cyprus will for the first time put actual figures into the draft MFF.

Cyprus is hoping for a political agreement on the MFF at the European Council on 18-19 October. But several diplomats said that this appears out of reach given how far apart the member states are at the moment.

The battle-lines have been more firmly drawn in recent months, when the net contributors to the EU’s budget, such as Britain, the Netherlands and Sweden, clashed with net beneficiaries from the EU’s cohesion policy, a group led by Poland. But the disagreements are expected to sharpen after the summer break, when figures will be introduced. The net contributors have made it clear that they will not accept any increase from current spending beyond the rate of inflation, while the cohesion countries want to preserve the spending that flows back to them.

Cypriot diplomats held bilateral meetings with other national governments earlier this month to establish the member states’ positions and identify the main areas of disagreement. Andreas Mavroyiannis, the deputy minister for European affairs of Cyprus, presented the findings to national ministers during a session of the general affairs council in Brussels on Tuesday (24 July), the first GAC chaired by Cyprus during its presidency of the Council of Ministers. Mavroyiannis said that the member states “gave us very clear and frank indications of their red lines and their priorities”.

“We feel wiser now as to what the member states’ concerns and priorities are, and this will help us find a consensual way forward in the negotiations,” he said.

On Tuesday, Janusz Lewandowski, the European commissioner for financial programming and budget, presented the ministers with the Commission’s updated proposal for the MFF, taking into account Croatia’s accession, scheduled for 1 July 2013, and new economic indicators, which have an impact on spending that is defined as a share of economic output. The changes raised the overall ceiling for spending commitments for the seven-year period from €1,025 billion in the initial proposal to €1,033bn.

Lewandowski’s insistence that this was a purely technical exercise did not convince either the EU’s net contributors or the cohesion countries. David Lidington, the UK’s Europe minister, said that the Commission’s updated proposal “runs flat contrary to what other parts of the Commission are urging on the member states”. “The additional demand takes the negotiations backwards,” he said. Eniko Gyory, Hungary’s EU minister, and Piotr Serafin, her Polish counterpart, attacked the Commission proposal from the opposite side, for cutting too much of the cohesion funding.

The ministers at Tuesday’s meeting formally adopted, without debate, the member states’ position on the draft budget for 2013, the last year of the current financial framework 2007-13. The member states are seeking to cut €5.23bn in payments from the Commission’s proposal, to bring total payments down to €132.7bn. But the disagreements over the MFF were mirrored in the voting on the 2013 budget as well. The British, Dutch and Swedish ministers voted against and Austria’s abstained, because they wanted even bigger cuts. Poland, Hungary and other cohesion countries view the Council’s position as minimum levels rather than ceilings.

José Manuel Barroso, the president of the European Commission, sent a letter to member states’ leaders late on Tuesday to express his concern about the Council’s position on the draft budget.